Cloud 9 for Software M&A?
The technology sector has long dominated M&A media coverage, with some of the most recognisable brands sparking the public’s interest with mega-deals grabbing headlines. Increasingly, these deals are focusing on one of the next big battlegrounds for technology companies: the cloud.
The cloud is currently attracting significant attention for acquirers of all stripes, from acquirers of all kind, from tech giants looking to pivot to cloud technology to private equity houses. The reasons for this are relatively straightforward. Cloud computinglivers a step-change for the global economy, supporting businesses from SMEs right through to the largest organisations. The diverse services offered by this technology have applications that are useful across a broad range of industries, demonstrating the cloud’s unique appeal.
But as cloud companies become more attractive for acquirers, it is worth paying attention to the different types of deals, to get a sense of how and where this market is headed. A recent report from Bloomberg asserted that 2016’s M&A performance is in part, driven by the desire of acquirers to bolt on new cloud companies to their existing portfolio. The sector has also been powered by the confidence of private equity investors in these types of companies, as well as the fall in valuations of many technology companies earlier in the year.
We look at three significant cloud deals that highlight the strength of this area of software M&A.
Oracle Acquires Netsuite
The acquisition of Netsuite for $9.3bn by Oracle is typical of the activity in software M&A. Oracle has existing Cloud capabilities in place, but many speculate that its move into acquisitions is prompted by fears it is falling behind rivals such as Amazon, Google and Salesforce.
Salesforce Acquires Demandware
The deal was pegged at $2.8bn, with Salesforce getting its hands on an e-commerce SaaS provider, Demandware, which has a significant presence in retail. It counts some of the biggest names in the sector as clients, built up since its inception in 2004.
Microsoft and LinkedIn
Not strictly a cloud purchase, but certainly one motivated by the scramble for the cloud, Microsoft’s eye-watering deal to acquire LinkedIn saw the acquirer get their hands on a company that is at the top of the tree in its market, with masses of data provided by its 433 million users. Should Microsoft successfully integrate its cloud services with LinkedIn’s professional network, the deal may go down as one of the most impressive in cloud computing’s short history.
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